Op EdsOP. ED.

1. Chapter V (Sections 105 to 117) of the Transfer of Property Act, 1882[1] (for short ‘TPA’) embodies the provisions relating to the leases of immoveable property. Section 105 of TPA defines a lease as:

105. Lease defined.—  A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

Lessor, lessee, premium and rent defined.— The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.”

2. The above definition of the lease under TPA postulates that besides other essential elements of a lease i.e. the parties being the lessor and the lessee; the subject-matter being an immoveable property; demise being a transfer of a right to enjoy; and the consideration being a price paid or promised being the premium or the rent, the time or the term or period of the said lease is an essential requisite of a valid lease. A valid lease may be granted for a certain time, express or implied, or in perpetuity. A lease which is silent as to the duration of its term will not be lease within the meaning of Section 105 of TPA.

3. The commencement of a lease must be certain or capable of being ascertained with certainty afterwards, so that both the time when it begins and the time when it ends, is fixed. A provision in the lease relating to duration thereof may be implied by law or usage. Even Section 106 of TPA, inter alia provides that in absence of a contract or local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes shall be deemed to be lease from year to year and that a lease of immoveable property for any other purpose shall be deemed to be lease from month to month.

4. Section 107 of TPA provides as to how the leases of immoveable property shall be made in law. The said section reads as under:

107. Leases how made.— A lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.

All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.”

5. This section prescribing the procedure for making of a lease between the parties classifies them into two”

One, a lease of immoveable property from year to year, or for a term exceeding a year, or lease reserving a yearly rent, can only be made by a registered document; and

Second, all other leases other than the above, can either be made by registered instrument, or the said lease to be made by an oral agreement accompanied by delivery of possession.

6. Therefore, it is manifest that all the leases of immoveable property not covered in the second classification shall have to be necessarily made by a registered document only. Needless to state that all the leases not covered by the first above have to be made either by registered document or by an oral agreement accompanied by delivery of possession.

 Effect of non-registration

7. Section 17(1)(d) of the Registration Act, 1908[2] provides that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent have to be necessarily registered.

8. Section 49 of the same Act, inter alia provides that no instrument which is compulsorily required to be registered shall affect any immovable property comprised therein, or confer any power to adopt, or be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered. However, an unregistered document affecting immovable property and required by the Registration Act or the TPA to be registered, may be received as evidence of any collateral transaction not required to be effected by registered instrument.

9. As already noted, period of tenancy is an essential requisite of a valid lease. Therefore, an unregistered lease deed cannot be looked into for purposes of period of tenancy. It thus follows that in respect of the leases classified in One under Section 106 TPA which require compulsory registration for making of a lease in law under Section 107 of TPA and is not so registered, the said instrument cannot be used for the purpose of establishing that it created, declared, assigned, limited or extinguished any right to the property comprised in the said document, and the said document will only create a month to month tenancy or year to year depending upon the purpose thereof. Therefore, if Sections 106 and 107 TPA are read accordingly, there shall be no conflict between the two.

10. The Calcutta High Court in the decision reported as Debendra Nath Bhowmick v. Syama Prosanna Bhowmick[3],  laid down the following dicta:

 “Then assuming that this case is governed by the Transfer of Property Act, I should like to notice the argument that because an annual rent was mentioned, the tenancy must be taken to be a yearly one. The lease was not for agricultural or manufacturing purposes and therefore must, in the absence of a contract to the contrary, be deemed to be a tenancy from month to month. It is said here that there was such a contract, for a yearly tenancy is to be implied from the mention of an annual rent. But when Section 106 speaks of a contract I think it means a valid contract. But in the present case there is no such contract and under Section 107 a lease such as is argued, for in this appeal can only be created by a registered instrument and there is none here. The notice was therefore sufficient so far as the tenancy is concerned.”

 11. Whether tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be ‘month to month’ tenancy even where the tenant has paid annual/yearly rent to the landlord has been answered in a three-Judge Bench decision of the Supreme Court reported as Ram Kumar Das v. Jagdish Chandra Deo[4]. The facts of said case were that the landlord had not executed a registered instrument for lease of land in favour of tenant. The tenancy created was neither for agricultural or manufacturing purpose. On two occasions, the tenant had tendered annual rent to the landlord. The landlord had terminated the tenancy by giving 15 days’ notice in terms of the second paragraph of Section 106 of TPA by treating the tenancy as from month to month. The question which had arisen before the Supreme Court was whether the tenancy was a monthly tenancy as treated by the landlord or a yearly tenancy since the tenant had paid annual rent to the landlord. It was argued on behalf of the tenant that in view of the fact that rent paid by the tenant was annual rent, it can be inferred that the intention of the parties was certainly not to create monthly tenancy but yearly tenancy, which argument was negatived by the Court in the following terms:

“….It is conceded that in the case before us the tenancy was not for manufacturing or agricultural purposes. The object was to enable the lessee to build structures upon the land. In these circumstances, it could be regarded as a tenancy from month to month, unless there was a contract to the contrary. The question now is, whether there was a contract to the contrary in the present case? Mr. Setalvad relies very strongly upon the fact that the rent paid here was an annual rent and he argues that from this fact it can fairly be inferred that the agreement between that parties was certainly not to create a monthly tenancy. It is not disputed that the contract to the contrary, as contemplated by Section 106 of the Transfer of Property Act, need not be an express contract; it maybe implied, but it certainly should be a valid contract. If it is no contract in law, the section will be operative and regulate the duration of the lease. It has no doubt been recognised in several cases that the mode in which a rent is expressed to be payable affords a presumption that the tenancy is of a character corresponding thereto. Consequently, when the rent reserved is an annual rent, the presumption would arise that the tenancy was an annual tenancy unless there is something to rebut the presumption. But the difficulty in applying this rule to the present case arises from the fact that a tenancy from year to year or reserving a yearly rent can be made only by registered instrument, as laid down in Section 107 of the Transfer of Property Act (vide Debendra Nath v. Syama Prosanna[5]. The Kabuliyat in the case before us is undoubtedly a registered instrument but ex concessis it is not an operative document at all and cannot consequently fulfil the requirements of Section 107 of the Transfer of Property Act.

  1. This position in fact is not seriously controverted by Mr. Setalvad; but what he argues is that a lease for one year certain might fairly be inferred from the payment of annual rent, and a stipulation like that would not come within the mischief of Section 107 of the Transfer of Property Act. His contention is that the payment of an annual rent, as was made in the present case, is totally inconsistent with a monthly lease. We are not unmindful of the fact that in certain reported cases, such inference has been drawn. One such case has been referred to by Reuben, J. in his judgment [Aziz Ahmad v. Alaudd in Ahmad[6] , where reliance was placed upon an earlier decision of the Calcutta High Court (Md. Moosa v. Jaganund[7])]. A similar view seems to have been taken also in Matilal v. Darjeeling Municipality[8].
  2. But one serious objection to this view seems to be that this would amount to making a new contract for the parties. The parties here certainly did not intend to create a lease for one year. The lease was intended to create a lease for one year, but as the intention was not expressed in the proper legal form, it could not be given effect to. It is one thing to say that in the absence of a valid agreement, the rights of the parties would be regulated by law in the same manner as if no agreement existed at all; it is quite another thing to substitute a new agreement for the parties which is palpably contradicted by the admitted facts of the case.
  3. It would be pertinent to point out in this connection that in the second appeal preferred by the plaintiff against the dismissal of his earlier suit by the lower appellate court, the High Court definitely held that the defendant’s tenancy was one from month to month under Section 106, Transfer of Property Act, and the only question left was whether payment to the Receiver amounted to payment to the plaintiff himself. In this suit the defendant admitted in his written statement that payment to the Receiver had the same effect as payment to the plaintiff, and the trial Judge took the same view as was taken by the High Court on the previous occasion, that by payment too and acceptance of rent by the Receiver, the defendant become a monthly tenant under Section 106, Transfer of Property Act. In his appeal before the District Judge which was the last court of facts, the only ground upon which the defendant sought to challenge this finding of the trial Judge was that the Receiver was an unauthorised person because of the decision of the Judicial Committee which set aside his appointment and consequently acceptance of rent by such person could not create a monthly tenancy. This shows that it was not the case of the defendant at any stage of this suit that because one year’s rent was paid a tenancy for one year was brought into existence. We think, therefore, that on the facts of this case it would be quite proper to hold that the tenancy of the defendant was one from month to month since its inception in 1924. This view finds support from a number of reported cases (vide Debendra Nath v. Syama Prasanna[9] ; Sheikh Akloo v. Emaman[10]), and in all these cases the rent payable was a yearly rental. On this finding no other question would arise and as the validity of the notice has not been questioned before us, the plaintiff would be entitled to a decree in his favour. The appeal thus fails and is dismissed with costs.”

 12. The effect of a compulsorily registrable lease, if not registered, was also explained by the e Delhi High Court in Deluxe Dentelles Pvt. Ltd. v. Ishpinder Kochhar[11] as under:

“21. A lease granted for any purpose, be it residential, commercial, manufacturing or agricultural, can be made only by a registered instrument if duration of the lease is for the period stated in the first paragraph of Section 107 of the Transfer of Property Act, 1882. But, a lease for the same purpose(s) of a lesser duration can be made, under the second paragraph, either by a registered instrument or by an oral agreement accompanied by delivery of possession.

  1. If one looks to Section 106 of the Transfer of Property Act it becomes evident that the classification of leases is according to their purpose. Section 106 classifies leases of immovable property for agricultural and manufacturing purposes in one class and all other leases in different class.
  2. Sub-section (1) of Section 106 is a deeming provision as per which, in the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year. Thus, where the parties have themselves indicated the duration of the lease relatable to agricultural or manufacturing purposes, sub-section (1) of Section 106 o f the Transfer of Property Act would be redundant. This is evident from the fact that sub-section (1) of Section 106 operates only “in the absence of a contract…..to the contrary”.
  3. Pertaining to leases, excluding leases for agricultural or manufacturing purposes, the legal fiction created in the second paragraph of sub-section (1) of Section 106 is to deem the leases to be from month to month. Of course, this deeming provision would also be ‘in the absence of a contract….to the contrary’.
  4. In the present case, the defendants have admitted the jural relationship of landlord and tenant between the plaintiff and Defendant 1. As per both plaintiff and defendants, Defendant 1 was inducted as a tenant in the suit premises by virtue of unregistered lease-deed dated November 21, 1999 for a period of eleven years and eleven months.
  5. The case (defence) set up by the defendants is that notwithstanding the fact that the lease-deed dated November 21, 1999 executed between the parties is an unregistered document, the tenancy of Defendant 1was not from month to month but for a period of eleven years and eleven months with an option to Defendant 1 to renew the lease by another period of eleven years inasmuch as Defendant. 1 had paid rent in advance to Ms. Neeta Mehra, erstwhile owner of the suit premises for a period of fourteen years approximately at the time when it was inducted in the suit premises.

                *                           *                      *

  1. In view of afore-noted authoritative pronouncement of law laid down by Supreme Court in Ram Kumar’s case (supra), the answer to the question posed above is: tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be ‘month to month’ tenancy even where the tenant has paid annual/yearly rent to the landlord.

  2. As a necessary corollary thereof, the tenancy of Defendant 1 in suit premises is deemed to be ‘month to month’ tenancy which could be terminated by giving 15 days’ notice. (We again note here that Defendant 1 has admitted the receipt of legal notice dated May 03, 2010 issued by the plaintiff terminating the tenancy of Defendant 1).” 

13. The Supreme Court in Park Street Properties (Pvt.) Ltd. v. Dipak Kumar Singh[12], held as under:

“9. A perusal of Section 106 of the Act makes it clear that it creates a deemed monthly tenancy in those cases where there is no express contract to the contrary, which is terminable at a notice period of 15 days. The section also lays down the requirements of a valid notice to terminate the tenancy, such as that it must be in writing, signed by the person sending it and be duly delivered.

11. It is also a well-settled position of law that in the absence of a registered instrument, the courts are not precluded from determining the factum of tenancy from the other evidence on record as well as the conduct of the parties…” 

14. The High Court of Delhi in  Sanjay Gupta v. Krishna Hospitality[13] , observed as under:

“11. Per Section 107 of the Transfer of Property Act, 1882, a lease of immovable property for any term exceeding one year can be made only by a registered instrument and all other leases may be made either by registered instrument executed by the lessor and lessee or by oral agreement accompanied with delivery of possession. The defendants in their written statement have pleaded lease agreement dated 23rd November, 2015, for a period of three years, executed by plaintiff and defendants and where under claim to be entitled to occupy premises till 31st October, 2018. The same is not registered and is admitted to be not registered. The same thus, under Section 49 of Registration Act, 1908, cannot be received in evidence of any transaction effecting such property. Per Section 106 of Transfer of Property Act, in the absence of registered lease deed, a lease of immovable property for any purpose other than agricultural or marketing, is deemed to be a lease from month to month, terminable by a fifteen days’ notice…”

15. The principle was reiterated by the Supreme Court in Sevoke Properties Ltd. v. West Bengal State Electricity Distribution Company Ltd.[14],  when it observed as under:

“13. In terms of the provisions of Section 107, a lease of immovable property for a term exceeding one year can only be made by a registered instrument.  Admittedly, in the present case, the indenture of lease has not been registered. In consequence, the contents of the indenture would be inadmissible in evidence for the purpose of determining the terms of the contract between the parties. This is the plain consequence of the provisions of Sections 17 and 49 of the Registration Act, 1908. The only purpose for which the lease can be looked at is for assessing the nature and character of the possession of the respondent.”

 Renewal v. Extension of lease

16. An instrument of lease may contain a provision to the effect that on the expiry of the term of the lease, it is to be renewed or extended. Such a provision may not ipso facto renew or extend the term of the lease but it entitles the lessee to obtain a new lease in his favour after the expiry of the original term. The Supreme Court in its judgment in Hindustan Petroleum Corporation Ltd.   Dolly Das[15], observed as under:

“12…Covenant for renewal is not treated as part of terms prescribing the period of lease but only entitles a lessee to obtain a fresh lease…”

 17. Renewal and extension of lease are two different concepts. They are not defined in TPA. As per Webster dictionary, ‘to renew’ means ‘to make like new’or ‘to restore to existence’; and ‘to extend’ means ‘to stretch out to fullest length’.

18. The distinction between these two concepts has often been a subject of discussion and has been considered by the Supreme Court in its judgment titled as Provash Chandra Dalui. v. Biswanath Banerjee[16] , while observing as under:

“14. It is pertinent to note that the word used is ‘extension’ and not ‘renewal’. To extend means to enlarge, expand, lengthen, prolong, to carry out further than its original limit. Extension, according to Black’s Law Dictionary, means enlargement of the main body; addition to something smaller than that to which it is attached; to lengthen or prolong. Thus extension ordinarily implies the continued existence of something to be extended. The distinction between ‘extension’ and ‘renewal’ is chiefly that in the case of renewal, a new lease is required, while in the case of extension the same lease continues in force during additional period by the performance of the stipulated act.”

19. The distinction between the said two concepts was reiterated by the Supreme Court in the judgment of State of U.P.   Lalji Tandon[17], in the following words:

“13….There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed; as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension..”

 20. This distinction was reiterated by the High Court of Delhi in  Aggarwal and Modi Enterprises (Cinema Project) Pvt. Ltd.   New Delhi Municipal Council[18].

21. Reiterating the distinction between the two concepts, as enunciated in Provash Chandra Dalui and Lalji Tandon (supra), the Supreme Court in its judgment titled as Hardesh Ores Pvt. Ltd. v. Hede and Company[19],  observed as under:

“25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants-plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease.”

 22. The High Court of Calcutta in the judgment of Renuka Seal  Sabitri Dey[20]  has made distinction between the concepts of renewal and extension of lease in the following words:

 “24…”To extend” means to enlarge, expand, lengthen, prolong to carry out further than its original limit. In other words, “extension” means enlargement of the main body; addition of something smaller than that to which it is attached; to lengthen or prolong. Thus, extension ordinarily implies the continued existence of something to be extended. But “renewal of lease” means creation of a new lease which creates a fresh right and obligation between the contracting parties. Thus, once a renewed lease comes within the scope of Section 107 of the Transfer of Property Act, such a lease can be made only by registered instrument…

32…when renewal is effected by a bilateral process on fresh terms and conditions to be settled between the parties after the expiry of the original lease period, it creates a new lease creating fresh relationship between the parties and under such circumstances it requires registration of a deed for renewal of lease.

33. The extension of lease, however, can be made through an unilateral process,inasmuch as, such extension is made on the option of one of the parties to the lease, as the party on the other part had and/or has no option but to accept the option for renewal exercised by the said party and to extend the said lease as per the provisions contained in the original registered lease deed.”

 23. It is thus clear that a clause in the instrument of lease either for renewal or for extension of lease is its important term and therefore, it has to be clear and specific, so as to enable the Court to ascertain the same. In case of uncertainty or ambiguity in the terms and conditions of the lease, whether there is an option clause for renewal or extension of lease, has to be determined reading all other covenants of lease as also the other evidence on record, so as to determine the intention of the parties.

Procedure of Renewal

24. The renewal of a lease is a privilege and the same is required to be done within the time limited and in the stipulated manner as provided in the lease for the said purpose. In the celebrity case of Caltex (India) Ltd. v. Bhagwan Devi Marodia[21], the Supreme Court held as under:

“4. At common law stipulations as to time in a contract giving an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed as conditions precedent. Equity followed the common law rule in respect of such contracts and did not regard the stipulation as to time as not of the essence of the bargain. As stated in Halsbury’s Laws of England, 3rd Edn., Vol. 3, Art. 281, p. 165 : “An option for the renewal of a lease, or for the purchase or re-purchase of property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse.” This passage was quoted with approval by Danckwerts L. J. in Hare v. Nicoll[22]. A similar statement of law is to be found in Foa’s General Law of Landlord and Tenant, 8th Edn., Article 453, p. 310, and in Hill and Redman’s Law of Landlord and Tenant, 14th Edn., p. 54. The reason is that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege he must do so strictly within the time limited for the purpose.

  1. With regard to equitable relief against the failure of the tenant to give notice of renewal within the stipulated time, the law is accurately stated in Halsbury’s Laws of England, 3rd Edn., Vol. 23, p. 626, Article 1329, footnote (u) thus :”Relief will not be given in equity against failure to give notice in time, save under special circumstances. The decided cases show that in such cases relief is not given in equity save upon the ground of unavoidable accident, fraud, surprise, ignorance not wilful or inequitable conduct on the part of the lessor precluding him from refusing to give the renewal. The limits of the equitable interference in such cases were clearly stated by the Master of the Rolls (Sir R. P. Arden) in Eaton v. Lyon[23] . He observed:

“At law a covenant must be strictly and literally performed; in equity it must be really and substantially performed according to the true intent and meaning of the parties so far as circumstances will admit; but if unavoidable accident, if by fraud, by surprise or ignorance not wilful, parties may have been prevented from executing it literally, a Court of Equity, will interfere; and upon compensation being made, the party having done everything in his power, and being prevented by means, I have alluded to, will give relief … I decide this case upon the principles on which, Lord Thurlow decided (Bayley v. The Corporation of Leominster 1792, 1 Ves. 476), and I hope now, it will be known, that it is expected, these covenants shall be literally performed where it can be done; and that equity will interpose, and go beyond the stipulations of the covenant at law, only where a literal performance has been prevented by the means, 1 have mentioned, and no injury is done to the lessor.”

6. We are of the opinion that the stipulation as to time in Clause 3(c) of the indenture of lease dated February 17, 1954 should be regarded as of the essence of the contract. The appellant not having exercised the option of renewal within the time limited by the clause is not entitled to a renewal.”

25. This principle was reiterated by the Delhi High Court in its judgments titled as Frankfinn Aviation Services Pvt. Ltd. v. B.C. Gupta[24]; Punchip Associates P. Ltd. S. Rajdev Singh[25]; Jagdish Gupta v. The State Trading Corporation of India Ltd.[26]; and MGR Holding (P) Ltd. v Loil Overseas Foods Ltd.[27].

26. It, therefore, follows that if the original registered lease deed contained an option clause for renewal, it has to be exercised strictly in accordance with the terms thereof, to be followed by execution and registration of a fresh lease deed in accordance with Section 107 of TPA, failing which the lessee cannot claim renewal of the lease or to continue in possession of the premises as a lawful lessee. The lessee continuing in possession without actual renewal only becomes a tenant holding over under a month to month tenancy, determinable by a notice in accordance with Section 106 of TPA.


*Advocate and a qualified Chartered Accountant. Author is currently a Senior Associate in Dispute Resolution Practice at L&L Partners Law Offices, New Delhi. Author’s views are personal.

[1] Transfer of Property Act, 1882

[2] Registration Act, 1908

[3] 1906 SCC OnLine Cal 83

[4] 1952 SCR 269

[5] 1906 SCC OnLine Cal 83

[6] 1933 SCC OnLine Pat 55

[7] 20 IC 715

[8] 17 CLJ 167

[9] 1906 SCC OnLine Cal 83

[10] 1916 SCC OnLine Cal 39

[11] 2015 SCC OnLine Del 14507 

[12] (2016) 9 SCC 268

[13] 2018 SCC OnLine Del 8942

[14] 2019 SCC OnLine SC 592

[15] (1999) 4 SCC 450

[16] 1989 Supp (1) SCC 487

[17] (2004) 1 SCC 1

[18] 2005 SCC OnLine Del 898

[19] (2007) 5 SCC 614 

[20] 2007 SCC OnLine Cal 501

[21] (1969) 2 SCR 238

[22] [1966] 2 QB 130 

[23] 3 Ves. Jun. 690:30 E.R. 122

[24] 2007 (9) AD (Delhi) 449

[25] 2011 SCC OnLine Del 131 

[26] 2012 SCC OnLine Del 3315 

[27] 2015 SCC OnLine Del 11953

Case BriefsCOVID 19District Court

District Court, Saket, Delhi: Raj Kumar Chauhan, J., directed “Miniso” to pay the rent arrears for the lockdown and post lockdown period stating that the company has no dearth of money as the company has been operating almost 10 similar premises on rent in Delhi successfully.

Lease

Allegations placed by the petitioners are that they had leased their property to respondent i.e. Miniso Life Style Private Limited.

Monthly Rent

Monthly rent of the leased out property was Rs 9,75,000/- plus GST per month and the same was to be paid in equal proportions to lessor 1, 2 and 3 as per the agreement signed between the parties.

Head of Business Development of Miniso i.e. respondent asked the petitioner to consider the waiver of rent for the time period of lockdown — April, 2020 to May, 2020.

Further, the petitioner informed the respondent that as per clause 12 of the agreement i.e. Force Majeure Clause was not applicable to the existing circumstances and respondent cannot take unjust and wrongful benefit of said clause.

Though the petitioners agreed to waive the penal interest on the delayed payment @18% p.a. but the respondent continued to threaten for creating third party interest in the demised premises.

Petitioners were represented by Counsels Gaganmeet Singh Sachdeva, Sumit Thakur and Counsel for the respondent was Akash Tyagi.

Legal Notice

Petitioners had to in view of the above circumstances send a legal notice for recovery of rent and arrears on 23-05-2020.

Later the respondent sent a proposal of paying 70% of the arrears of rent for the month of April and 90% of the rent for June and July, 2020.

Petitioners in good­faith and trust sent the invoices of the rent for the above stated months and requested the respondent to pay the payment after deducting 15% rebate for arrears of rent for April, May, alongwith rent of June and July.

Despite sharing the invoice the respondent did not clear the arrears of rent and stopped taking calls from the petitioners.

In view of the above circumstances, the present petition was filed.

Respondents contention was with regard to the maintainability of the petitions stating that Clause 12 of the Lease Deed provides eventualities wherein in case the demised Premises is, whether fully or partially, destroyed or damaged by any Act of God, such as by flood, earthquake, storm etc. save and except fire, becomes unfit for occupation or use, the rent payable by the respondent shall be suspended till such time as the Demised Premises is once again rendered fit for use and occupation by the respondent.

Counsel for the Petitioners relied upon the decision in, Sona Corporation India (P) Ltd. v. Ingram Micro India (P) Ltd., O.M.P (COMM.) 249/2018 and Ramanand v. Dr Girish Soni, R. C. Rev. No. 447 of 2017.

The above two cases were cited with respect to the contentions that Court under Section 9 of the Arbitration Act can direct the payment of rent due as well as future rent in the same manner as the Court can grant in a civil suit under Order 39 Rule 10 CPC.

Adding to the above, the latter case was relied upon to rebut the respondent’s claim for waiver of rent.

Decision

Bench on perusal of the referred provisions and sections of Arbitration Act and CPC held that the respondents are directed to pay admitted rent to the petitioner for the period which has not been paid for the leased premises alongwith future payment also be paid as per the lease deed.

Further, adding to its analysis of the facts, Court stated that on perusal of the force majeure clause in the agreement, it can be stated that the lessee is entitled to suspension of the rent only if the property has been damaged or destroyed by any force Majeure event.

Admittedly, the property in question has not been damaged/destroyed in force majeure event.

Hence, in view of the law laid down by Delhi High Court in the decision of Sona Corporation India (P) Ltd. v. Ingram Micro India (P) Ltd., O.M.P(COMM.) 249/2018 and Ramanand v. Dr Girish Soni, R. C. Rev. No. 447 of 2017, Court concluded its decision stating that,

“mere temporary non-use of the tenanted premises by the respondent and yet being in power and possession of the premises in view of the temporary lockdown due to the COVID-19 Pandemic, the said event cannot be covered under the force Majeure clause of the lease agreement.”

Therefore, the respondent cannot claim waiver of rent.

Hence the Court is empowered under Section 9 of the Arbitration Act to order payment of arrears of rent for the lockdown period and also post lockdown period.

In view of the above terms, petitions were disposed off. [Uma Sharma v. Miniso Life Style (P) Ltd., 2020 SCC OnLine Del 979, decided on 06-08-2020]

Case BriefsCOVID 19High Courts

Delhi High Court: A Division Bench of D.N. Patel, CJ and Prateek Jalan, J., imposed costs on the petitioner while rejecting his petition to grant waiver of rent for all tenants and related reliefs.

In the present petition, following are the reliefs sought:

  1. Waiver of Rent for all the tenants
  2. Constitution of ‘Rent Resolution Commission’,
  3. Constitution of ‘Rent Auxiliary Fund’
  4. Issue directions to the Delhi Police to make amendments to the standard operating procedure where, if their Control Room officer receives any distress call on ‘100 or 112’ from a tenant or a landlord, as the case may be, the officer shall connect the caller, after receiving her consent, to ‘Rent Resolution Commission’
  5. One time amnesty to the landlords or tenants, and
  6. setting aside order dated 17th May, 2020 passed by respondent 1/UOI

Essence of the petition

Petition asks landlords to forgo consideration for their premises already retained by the tenant.

The powers/discretion for waiving of such consideration (rent) vests first with the landlords, who are contractually entitled to the same. This Court will be extremely slow in interfering with the contractual terms which have been entered into by the parties to the contract.

Court declined to entertain the prayer for waiver of the rent and added that,

It ought to be kept in mind that Court cannot do charity at the cost of others. Charity beyond law is an injustice to others.

If the landlord is entitled to receive the rent/consideration in accordance with law as per the contractual agreement entered between the parties concerned, then, the Court cannot, by a general order of the nature sought by the petitioner, waive such amount.

Rent Resolution Commission

In Court’s opinion it sees no reason to constitute ‘Rent Resolution Commission’ and provide for all the mechanism of appointment of the Members thereof, procedure for removal thereof, fixation of salary thereof etc.

Moreover such issues are policy oriented and not for the Court to decided as the same lies in the legislative/executive domain.

Further the Court added that, it cannot pass general directions that would result in waiver of contractual or property rights or establishment of adjudicatory bodies.

Fallacy in the Case

Petitioner seeking an order placing the burden of proof on the landlord with regard to the financial situation of the tenant is the fallacy in the matter.

Further, petitioner was unable to justify as to how a landlord can be asked to provide such evidence which may not be within his/ her knowledge at all. The petitioner has sought to postulate a scheme based upon his own understanding, but without sufficient thought as to the modalities or the consequences of the proposal.

One time amnesty to landlords or tenants

For grant of one time amnesty requires various factors to be considered and the same will be a policy decision to be taken by the Government authorities.

Court is not the maker of the law, and cannot draft a brand new law, except where the law is silent or where some lacuna is to be filled up.

Presumption

It has been presumed that the tenants alone are suffering from financial hardship or from the economic consequences of pandemic and lockdown, however, it ought to be kept in mind that even the landlords can be financially dependent on the rent.

Thus, whenever a landlord expects eviction of the premises on the basis of non-payment of the rent, in such eventuality, the Court has to appreciate the proved facts of that particular case.

Thus in view of the above the Court does not see any reason to interfere with the order dated 17th May, 2020 passed by UOI.

Concluding its analysis for the above matter, Court stated that the present petition does not appears to be a public interest litigation, but it is publicity interest litigation.

Proposals made by the petitioner are ill- conceived, as he does not appear to have thought about their practicability or their effect on other stakeholders.

Cost of Rs 10,000 have been imposed on the petition for abuse of process of the Court and the said amount will be utilized for COVID relief and welfare measures. [Gaurav Jain v. UOI, 2020 SCC OnLine Del 652 , decided on 15-06-2020]

COVID 19Hot Off The PressNews

Supreme Court: A bench of Ashok Bhushan and SK Kaul, JJ has dismissed a petition seeking directions to the Union of India for compliance with the Ministry of Home Affairs (MHA) order dated March 29, which directed landlords not to demand rent from students and migrant labourers for a period of one month amid the coronavirus-induced lockdown. The Court also warned the petitioner in-person advocate Pawan Prakash Pathak of heavy cost.

Justice Kaul said,

“The lawyers are filing a number of cases with respect to COVID-19, I don’t understand this,”

The petition had also sought a quick response be taken on the evictions being reported by tenants amid COVID-19 or till further orders of the government.

The MHA had earlier warned of strict action against those who force tenants to vacate their rented accommodation due to a failure to pay rent amid the ongoing crisis.

(Source: ANI)

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ranjan Gogoi, CJ and L. Nageswara Rao and Sanjiv Khanna, JJ has refused to hold  Section 13-B of the East Punjab Urban Rent Restriction Act, 1949 (Rent Act) merely because it grants a right to claim eviction for bona fide need by summary procedure to a certain group of landlords, that is, Non-Resident Indians subject to and on the satisfaction of statutory conditions which incorporate a check on frivolous evictions.

The Court said that the plea that Section 13-B ought to be struck down on the ground that similar rights can be extended to other landlords was without substance, as

“It rests with the legislature to make laws and extend it to other similarly situated persons. The rent act(s) invariably give similar rights by a controlled mechanism and alluded riders to various other classes/groups of landlords, namely, government servants, members of armed forces, the retired or soon to retire employees of the Central and the State Governments, widows, etc.”

The Court, further, explained that the right of Non-Resident Indians to initiate eviction under the summary procedure provided in Section 18-A of the Rent Act is not an unfettered and absolute right. It is subject to satisfaction of various pre-requisites and imperatives that ensure and check potential abuse by resorting to a short-circuit procedure. The requirement should arise from a genuine need of the Non-Resident Indian landlord or his dependent. Such landlord should be an owner for five years preceding the date of filing of the eviction petition. There is a cap on permitting the use of the provision which is available only once in a lifetime and only in respect of one building. There are restrictions and constraints on the re-sale and re-letting and a further requirement to possess the property for a continuous period of three months after the possession is taken.

It was, hence, noticed that the pre-conditions and post possession restrictions suggest that Section 13-B serves a specific policy objective to ensure the right of Non-Resident Indians to occupy their property in the Union Territory of Chandigarh and the State of Punjab as the case may be, after “returning” to their country. This right has to be balanced with the right of the tenants to establish their case on merits by disproving the genuine requirement of the Non-Resident Indians.

“Section 13-B cannot, therefore, be treated as an arbitrary classification that infringes and violates Article 14 of the Constitution.”

[Ram Krishan Grover v. Union of India, 2019 SCC OnLine SC 1469, decided on 14.11.2019]

Case BriefsHigh Courts

Karnataka High Court: S.G. Pandit, J. while disposing of this Civil Revision Petition filed under Section 115 of Civil Procedure Code set aside the order of the lower Court.

In the instant case, the application of the petitioner filed under Order 17 Rule 1 and 2 CPC was rejected by an order on 16.02.2019 for non-deposit of arrears of rent. Aggrieved by this, the petitioner had assailed this order.

The petitioner, a tenant filed R.A. No. 24 of 2015 against the Judgment and Decree of the Civil Judge and JMFC, Nagamangala. The application was for seeking fifteen days’ time for payment of arrears of rent/damages. But, it was rejected by the Trial Court on the ground that no undertaking was filed as to on which date it will be given and no bonafide was given. As a consequence of this, R.A. No. 24 of 2015 was also dismissed.

The petitioner deposited a sum of Rs 66,000 before this Court against the aforesaid payment of arrears of rent/damages.

N. Manjunatha, Counsel for the Respondent submitted that the above amount shall cover till the month of May 2019.

To this D.S. Hosmath, Counsel for the petitioner submitted that the remaining will be submitted before the Appellate Court.

The Court after analysing the facts and circumstances of the case observed that instead of rejecting the application outright, some reasonable time should have been granted. The Court also directed the appellate court to hear the appeal on merits.[Channappa v. M.R. Narayanashastry, 2019 SCC OnLine Kar 1836, decided on 17-09-2019]

Case BriefsForeign Courts

Supreme Court of Pakistan: The Three-Judge Bench of Mushir Alam, Faisal Arab and Ijaz ul Ahsan allowed an appeal filed by a landlord and directed the tenant to vacate premises for failure to pay rent in terms of the tenancy agreement.

Respondent herein was inducted as a tenant in the appellant’s premises at a fixed monthly rent. The tenancy agreement was for a period of eleven months, and clause 15 thereof stipulated that rent shall be increased by seven per cent after every eleven months. However, after the lapse of eleven months, respondent remitted rent which was less than the amount stipulated under the agreement. Appellant (landlord) demanded the same, and on refusal, by respondent, he filed an eviction application before the Controller of Rents, who ordered respondent-tenant’s eviction. Respondent filed an appeal before the learned High Court wherein the learned Single Judge held that Section 7(5) of the Cantonments Rent Restriction Act, 1963 prohibits increase in rent beyond what is determined under the tenancy agreement unless a period of three years has elapsed, therefore, no default in the payment of rent had been committed. Aggrieved thereby, the appellant-landlord filed the instant appeal.

The Court opined that the tenancy agreement provided that the rent of the premises shall be increased by seven per cent after every eleven months. Under the urban rent laws tenancy continues even after the expiry of the term provided under the tenancy agreement. Hence where the tenant continues to occupy the tenement after the expiry of the term mentioned in the agreement the covenants of the agreement continue to apply except such covenants that are in conflict with the provisions of the applicable rent law.

It was held that the periodical increase in rent agreed between the parties under the tenancy agreement must be regarded as the rent determined by an agreement between the landlord and the tenant within the meaning of Section 7(5) of the Act. Section 7(5) of the Act prohibits any unilateral increase in rent, which surprises the tenant, before the expiry of three years. An increase, which is not unilateral but with the consent of both the parties cannot be subsequently disputed by the tenant unless it is called in question through an application made for fixation of fair rent.

In view of the above, it was concluded that the respondent had failed to pay rent in terms of the tenancy agreement and thus the impugned judgment was set aside.[Abdul Latif v. Parmacie Plus, 2019 SCC OnLine Pak SC 4, Order dated  25-02- 2019]